Setting what you charge.
WHAT TO BASE PRICE ON
What the market will pay, and what you need.
WHAT NOT TO BASE IT ON
Cost alone.
WHY
It ignores what customers value and what competitors charge.
WHAT TO ESTABLISH
Your margin requirement, overall.
WHY OVERALL
Individual items need not all carry the same margin.
WHAT ITEMS CARRY LOW MARGIN
Items customers know the price of.
WHY
They compare, and being visibly expensive damages perception across everything.
WHAT ITEMS CAN CARRY HIGHER MARGIN
Items customers do not compare Impulse purchases Items where you provide something extra
WHAT TO ENSURE
That the overall mix produces your required margin.
WHAT TO CHECK
Competitor prices on the items customers compare.
HOW OFTEN
Regularly for the visible items.
WHAT TO DO ABOUT SUPPLIER PRICE INCREASES
Pass them on, promptly.
WHY PROMPTLY
Absorbed increases erode margin and become harder to recover.
WHAT TO AVOID
Discounting as a routine Competing on price against larger operations
WHY THAT SECOND POINT
They buy better than you and can sustain lower prices.
WHAT TO COMPETE ON INSTEAD
Range, service, convenience, availability.
WHAT TO BE CLEAR ABOUT
Prices displayed accurately.
WHY
Price discrepancies at the till damage trust immediately.
WHAT TO ESTABLISH
That displayed prices match the system.
